Considering contempt of court—Power and others v Hodges and others

Considering contempt of court—Power and others v Hodges and others

How can practitioners help their clients avoid contempt of court? Gavin McLeod, barrister at St Philips Chambers, advises that it is an element of the lawyer’s duty to reinforce in the client’s mind the realities of orders, the obligation to comply, and the fact that penal notices are not included to encourage compliance but to demand it.

Original news

Power and others v Hodges and others [2015] EWHC 2931 (Ch), [2015] All ER (D) 215 (Oct)

The liquidators of a company applied to the Chancery Division to commit the company’s directors for contempt of court in failing to comply with a disclosure order. The court only imposed fines on two out of the four directors because the funding and structure of the disclosure exercise had been in the hands of the other two directors. The remaining two directors, who had agreed to fund the disclosure exercise, were sentenced to imprisonment on a suspended basis.

Briefly, what was the background to this application?

Power was an application by liquidators for the committal to prison of four former directors for contempt. The applicants asserted that the respondents were guilty of contempt in failures to comply with what was termed as the ‘disclosure order’. The essential background was that the applicants had issued proceedings asserting breach of fiduciary duty and/or misfeasance, in that it was said that during the company’s insolvency the respondents had transferred and disposed of company assets for illusory consideration etc. Freezing orders were obtained, along with an order that the respondents disclose various details—eg usernames and passwords for email accounts—so as to enable the applicants to see what communications had passed in their personal correspondence concerning the company. Continuation of this disclosure requirement was opposed on privacy and privilege grounds. Instead, the respondents proposed their own solution whereby an independent expert would undertake the necessary searches of personal communications systems/devices and would report

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.